The Hits Keep on Coming – More Frontline Zeroes of the Pandemic.
Part II – An addition to the Small Business Owners (Real or Fake) Who Are Accused or Convicted of the Largest EIDL/PPP/CARES Act Fraud
By Thomas W. Tramaglini, Managing Director at BRP Onesta
A few weeks ago, I wrote an article (see link below) that provided some context about one of our clients who was convicted of defrauding the United States of nearly $1.2 Million in Payroll Protection Program Funding because it was a real eye-opener for me and my journey in an industry that supports small businesses. Every day, I work with professional, hard-working, small business owners who in many cases live paycheck or have had to shut their doors because of the Pandemic. I love our clients because they are the crossroad of what makes our nation great.
Yet, I continue to read about the people who have defrauded our nation with EIDL or PPP fraud and I wanted to share more examples of what some people tried to get away with that in essence, shut out many of our clients and small business owners who deserved PPP or EIDL funds and were shut out.
These Small Business Owners Lied About The Number of Employees They Had
If you read the dockets on sites like Arnold & Porter, many of the cases involve small business owners flat out lying on their PPP applications about the number of employees they had. While I believe that this could have been a practice more prevalent than what is known, the cases also show falsified documents made to back up the claims for how many employees a company did employ.
I guess these people did not read much Mark Twain. He said, “Honesty is the best policy – when there is money in it.”
Former Olympian Allison Baver
For instance, former Olympic speedskater Allison Baver is accused of falsely obtaining $10 Million in PPP funds. According to Newsweek, Baver claimed that her company, Allison Baver Entertainment had over 400 employees on its monthly payroll. She submitted several loan applications to banks back in April 2020, however according to the complaint, she did not have any employees on payroll.
For anyone who has any brain and owns a small business, it takes a big set to try and get $10 Million in PPP funding and have 0 employees. We will see how this case is defended – Looks like the Alamo to me.
Lamborghinis, Trucks, Rolexes, Real Estate…
Similar to our client that I wrote about in the first article (The Zeroes of the Pandemic) Henry, Lee Price III from Houston defrauded the government of $1,600,000. In fact, Price tried to get PPP funding for 3 different entities and even applied for a PPP loan under the name of a guy who had recently died. According to the complaint, “Two fraudulent applications received funding, according to the complaint. Price Enterprises Holdings allegedly received more than $900,000, while a loan application listing 713 Construction was approved for over $700,000. The loan applications allegedly asserted both entities each had numerous employees and significant payroll expenses. According to the charges, however, neither entity has employees nor pays wages consistent with the amounts claimed in the loan applications. Further, the individual listed as CEO on the 713 Construction loan application died in April 2020, a month before the application was submitted, according to the complaint.”
Price used his proceeds to purchase a Lamborghini Urus, a Rolex, and purchase real estate.
In September, Price pled guilty to wire fraud and money laundering. (see https://www.justice.gov/usao-sdtx/pr/houston-entrepreneur-charged-spending-covid-relief-funds-improper-expenses-including)
A Common Practice of Those Convicted of PPP fraud – Submitting False 941 Forms
One of the requirements for companies that ran payroll was to submit Form 940 or 941 with their PPP application. If you review the different cases and follow the news clearly the list of those who submitted Fraudulent 940s/941s is growing. For instance, this month, a ring of those submitting fraudulent PPP applications was brought down in Georgia.
Ex University of Maryland Football Player Marc Mason
Earlier in January 2022, Marc Mason, the owner of Atlanta Business Capital is accused of submitting fraudulent PPP applications for more than one of his businesses. He received nearly $600,000 in funding. On top of that, Marc is separately accused of assisting others in getting PPP funds. Allegedly, Marc helped business owners by creating IRS 941 forms for the business owners to submit to banks. If the loans were awarded, he would receive a 2%-5% success fee from the borrower.
Celebrities Among Those Connected to Mason
The Atlanta Journal-Constitution highlighted Mason’s complaint and described 19 people connected with his scheme in Georgia. Included in this list were Desperate Housewives Ion Overman, Dale Godboldo who was in The People v. O.J. Simpson, and music producer Carlos “Clos” Stephens.
Camus said, “Stupidity has a knack of getting in its way.” The implications –
Well, when writing an article like this, one has to ask the question, So what?”
As I began this blog article, every day I work with small business owners and clients who put their lives and souls into their business. The Pandemic hit hard. They needed help. I know many small business owners who were shut out of needed funding because the funds ran dry.
It is clear that the government is beginning to find more and more cases where small business owners submitted fraudulent documents in their applications.
In my first article, I ranked my top 15 Accused or Convicted of Fraud. I am not sure were any of these “small business owners” would fall on that list. Either way, it is horrible to see the means that people went to in order to defraud those who really needed the help. I fully expect to continue to see more cases of small business owners who submitted fraudulent 941 forms or purchased things which were just dumb, like Lamborghinis and Jewelry.
For now, again in case you missed it, here is our “Top Fifteen Alleged or Convicted List for Pandemic Relief Fraud.”
- ($14M) Apocalypse Bella (https://www.justice.gov/usao-sdny/pr/two-texas-men-and-one-oregon-man-charged-fraud-scheme-obtain-over-14-million-covid)
- ($11.1M) Amanda Christian (https://www.justice.gov/opa/pr/twenty-two-charged-connection-more-11-million-paycheck-protection-program-fraud-scheme)
- Charles Petty ($11.1M) (https://www.justice.gov/opa/pr/twenty-two-charged-connection-more-11-million-paycheck-protection-program-fraud-scheme)
- ($11.1) Charmine Redding (https://www.justice.gov/opa/pr/twenty-two-charged-connection-more-11-million-paycheck-protection-program-fraud-scheme)
- ($7.6M) Jacob Carter, Quadri Salahuddin, Anwar Salahuddin, Christal Ransom (https://www.justice.gov/usao-sdny/pr/four-defendants-charged-76-million-covid-19-fraud-scheme)
- ($7.2M) Don Cisternino (https://www.justice.gov/usao-mdfl/pr/seminole-county-man-charged-covid-relief-fraud)
- ($6M) Christopher Lick (https://www.justice.gov/usao-ndms/pr/starkville-man-charged-more-6-million-covid-relief-fraud-false-statements-and-money)
- ($5.8M) Julio Enrique Lugo (https://www.justice.gov/usao-mdfl/pr/davenport-couple-charged-58-million-covid-relief-fraud)
- (4.5M) Christina Burden (https://www.justice.gov/usao-ndca/pr/oakland-woman-charged-million-dollar-scheme-defraud-pandemic-relief-programs-struggling)
- ($3.8M) Gregory Blotnick (https://www.justice.gov/usao-nj/pr/new-york-and-florida-resident-charged-38-million-paycheck-protection-program-fraud-scheme)
- ($3M) Anuli Okeke (https://www.justice.gov/usao-edny/pr/two-former-employees-new-york-branch-major-bank-and-accountant-charged-cares-act-loan)
- ($2.2M) Abdreq Aaron Lloyd, Russell Schort (https://www.justice.gov/usao-or/pr/two-oregon-men-face-federal-charges-pocketing-millions-covid-relief-fraud-scheme)
- ($1.9M ) John Jhong (https://www.justice.gov/usao-nj/pr/sussex-county-man-charged-19-million-paycheck-protection-program-fraud-scheme)
- ($1.6M) Alicia Ayers, Andrea Ayers, Traci Proctor (https://www.justice.gov/usao-sdny/pr/three-defendants-charged-16-million-covid-19-fraud-scheme)
- ($1.6M) James Kyle Bell (https://www.justice.gov/usao-dc/pr/nevada-man-pleads-guilty-election-fundraising-scam-and-cheating-taxpayers-out-paycheck)
Source: Arnold & Porter, 2021 https://www.arnoldporter.com/en/general/cares-act-fraud-tracker
There are other people or groups of people who have been accused or convicted (some for more greedy amounts than below and can be found here: https://tinyurl.com/2d5rm823.
*Disclaimer to reader – We believe that every person is entitled to due process and until convicted of any crime, anyone accused should be innocent until proven guilty. All contents in this article, including names and claims were confirmed in by research through the United States Department of Justice or the State the person is accused from.
Dr. Thomas W. Tramaglini is the Managing Director for BRP Onesta, a company that supports small businesses. By offering a host of important and affordable services that small business owners tend to not have time to do themselves, the team at BRP Onesta can help small businesses grow infinitely. Although located in on the famous Jersey shore, BRP Onesta serves clients in all 50 states, Puerto Rico, Mexico and Canada.